Broome County Legislature vote on natural gas drilling offer likely to be close

Lawmakers will decide Thursday on Inflection's proposal

Nov. 15, 2010

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The Broome County Legislature is set Thursday to consider a lucrative offer from Denver-based Inflection Energy for the gas rights to county-owned land, and several lawmakers said they expect the margin to be razor thin.

"It's going to be like some of the races on Election Day: right down to the wire," said legislature Chairman Daniel D. Reynolds, a Vestal Democrat.

Reynolds initially said last Thursday he expected the proposal -- $7.9 million up front and 20 percent royalties for the rights to 3,200 acres of county land over five years -- to have the necessary support to pass. After speaking to additional legislators the next day, he wasn't so sure.

"It's really too close to say it's going to go one way or the other," he said.

Simple math backs him up. Of the 19 legislators, four have been barred from voting or discussing the lease because they are considering leasing their own rights. At least four legislators -- Reynolds; Mario Nirchi, D-16th District; Jerry Marinich, R-10th District; and Barry Klipsch, D-18th District -- have said they plan on voting against the offer.

Of the 11 others, 10 must vote in favor for the resolution to pass.

Dollars and sense

Mark Whalen, a Democrat representing Binghamton's East and South Sides, said he's voting for the offer because he "has a fiduciary responsibility to the people I represent." He said he fears if the county doesn't enter a lease, gas companies will take the gas anyway through compulsory integration. That state policy allows gas companies to drill under non-leased land if it controls the rights to 60 percent of the acreage serviced by a drilling operation.

"We have a chance to get a 20 percent royalty, which is where the real return is," Whalen said. "That's significant. If we wait and do nothing, we're likely to get the minimum (through compulsory integration) of 12.5 percent."

Others legislators want to wait for the state Department of Environmental Conservation to complete its review of permitting guidelines. High-volume hydraulic fracturing, a stimulation technique necessary for the type of shale gas drilling Inflection and other companies would use, is on hold in New York until the guidelines are finalized.

"I feel that although the county has done its due diligence, I still want to see what the rules of the DEC will be," Marinich said. "It's definitely not about the money. The money in itself is what it is, but I want to know what the rules are going to be before we go forward."

Klipsch also said he wanted to see the county wait for the DEC review, but felt the county could get a better offer regardless.

"I am voting against the Infection offer because I think we can do better," he said. "I really believe it."

Second offer

The company has made a pair of offers for county land. The first, which came in July, was for the rights to all 5,610 acres, with the same 20 percent royalty payment. The current offer comes with a smaller bonus payment, but excludes some of the county's most valuable properties near the Pennsylvania border.

Both deals have been backed by county Executive Barbara J. Fiala, who pulled the July offer after it became clear it did not have support from the legislature. The current deal is valid until the end of the month.

"I believe natural gas development must move forward," Fiala wrote in an op-ed piece published Sunday in this newspaper. "We can provide reasonable protection for our environment and attract needed economic development. I encourage all citizens and county legislators to support this offer."

But Nirchi has been critical of the administration's approach, citing concern that legislators won't get a chance to vote on an actual copy of the final lease, but rather a set of terms that must be included. He also said the lease should not go before a lame-duck legislature, with a new set of lawmakers set to take office on Jan. 1.

"I hope (legislators) realize that we're doing a foolish thing if we approve the lease at this stage," he said. "I'm not against a lease. I'm against this lease."